After posting better-than-expected third-quarter results, DoorDash Inc DASH received four price target changes from analysts.
Although still bullish, price targets were lowered to reflect a more conservative estimate based on the stock trading at 30x 2023 adjusted EBITDA, which may keep investors from taking the risk.
The Analysts: Needham’s analyst Bernie McTernan maintained a Buy rating and moved the price target from $115 to $80.
RBC Capital Market's analyst Brad Erickson maintained an Outperform rating and moved the price target from $100 to $70.
Mizuho Securites' James Lee maintained a Neutral rating and moved the price target from $87 to $70.
Raymond James analyst Aaron Kessler maintained a Market Perform rating on valuation.
Needham On DoorDash: The company beat Needham’s third-quarter expectations on bookings by 2% and beat its adjusted EBITDA by 80%, due to strong margins, growing subscribers and the DashPass reaching record levels.
McTernan's 2023 forecast for adjusted EBITDA of $530 million implied 7.5% to 8% incremental margins on U.S. restaurants generating $3 billion of contribution profit and a loss on other categories of $770 million, 10% higher than the current run rate investment.
Due to management investing in new products to grow its total addressable market (TAM), marketplace GOV from non-restaurant categories grew by well over 80% organically year-over-year in the quarter, McTernan said.
RBC Capital's Thoughts On DoorDash: RBC Capital’s analyst said management was not seeing a consumer slowdown due to moderate growth in the U.S. because order frequency remained strong.
Erickson reported that if the EBITDA beat was too high, then it would suggest a marketing pullback due to slowing demand and too little would suggest new verticals and geos aren't going well.
Erickson was expecting modest expansion in the fourth quarter and for the next year, with fourth quarter GOV of roughly $14.1 billion and adjusted EBITDA of $121 million compared to company guided results of $13.9 billion to $14.2 billion GOV and $85 million to 120 million adjusted EBITDA.
Mizuho Securities' Outlook On DoorDash: Mizuho Securities reported U.S. GOV grew by 22% year-over-year, three points ahead of the analyst's forecast as consumer demand remained resilient for food and grocery delivery.
EBITDA margins expanded 140 bps to 9.5%, as DoorDash benefited from lower customer acquisition costs from rational competition, lower driver costs from increased supply and lower delivery costs from improved efficiency with drivers working more hours, Lee reported.
With DoorDash’s business model proving resilient, Lee maintained its full-year 2025 expected EBITDA of $1.7 billion, although the analyst said the full-year 2023 GOV consensus of 19% was too aggressive compared to the estimate of 16%.
Raymond James On DoorDash
Raymond James remained positive on DoorDash’s fundamentals due to a large total addressable market for food delivery as well as expansion opportunities in adjacent categories and that it had established itself as the leading food delivery platform in the U.S. with a 50% plus market share.
Raymond James expected DoorDash to achieve roughly 15% long-term revenue growth and 25% plus long-term EBITDA margins.
For 2023, Raymond James GOV estimated a decrease of $53.1 billion to $64.2 billion with adjusted EBITDA estimates of between $353 million to 653 million.
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